## Facts

- The City of Albuquerque filed four applications with the New Mexico State Engineer seeking permits to appropriate underground water from the Rio Grande Underground Water Basin for municipal use.
- Each application proposed drilling a well about 1,200 feet deep on the mesa roughly six to seven miles east of the Rio Grande and pumping 1,500 acre-feet per year.
- In letters submitted with the applications, the City asserted that, as successor to a Spanish-era pueblo, it had an “absolute” right to use all surface and underground waters within its limits and stated that filing applications did not waive that claim.
- After notice and an administrative hearing, the State Engineer found substantial evidence that the underground water at issue contributed to the Rio Grande’s base flow, that the Rio Grande was fully appropriated, and that the proposed pumping would injure existing rights held by prior appropriators of river water.
- The State Engineer also found that about 50% of the water pumped would ultimately return to the river, meaning that only the remaining net depletion would reduce river flow for senior users.
- The State Engineer proposed allowing the wells if the City would offset the net depletion by retiring (or otherwise offsetting) an appropriate amount of the City’s surface-water rights so that senior river rights would not be injured.
- The City rejected the offset condition and maintained that groundwater permitting had to be handled separately from surface-water administration and that its asserted pueblo claim entitled it to the water.
- The State Engineer denied the applications based on impairment of existing Rio Grande rights and the City’s refusal to take steps to offset adverse effects.
- On statutory appeal, the district court accepted the Engineer’s factual findings about connection and impairment but ruled, as a matter of law, that the State Engineer lacked authority to administer surface and underground waters together and therefore had to grant the permits because the underground basin itself was not fully appropriated.
- The State Engineer appealed to the Supreme Court of New Mexico.

## Issues

1. Whether the State Engineer may consider the physical connection between underground water in a declared basin and a fully appropriated surface stream and may condition or deny groundwater permits to prevent impairment of existing surface-water rights.
2. Whether New Mexico recognizes separate substantive water-right regimes for surface water and groundwater that would bar “conjunctive” administration by the State Engineer.
3. Whether Albuquerque possessed an “absolute” pueblo-based municipal right to all water within its boundaries that would require issuance of the permits, despite the administrative record.

## Decision

- The Supreme Court of New Mexico reversed the district court and remanded with directions consistent with the State Engineer’s authority to protect existing rights.
- The court held New Mexico does not have one substantive law for stream-water appropriation and another for underground-water appropriation; once acquired, the substantive right is the same.
- The court held the State Engineer may account for the connection between groundwater and surface flow and may condition or deny permits when pumping would impair existing rights in a fully appropriated river.
- The court approved the Engineer’s approach of allowing pumping only with an offset (such as retirement of surface rights) sufficient to prevent injury from the net depletive effect on the Rio Grande.
- The court rejected Albuquerque’s claimed pueblo right as a basis to bypass the permitting and impairment rules; the claim was not supported in the administrative record and, in any event, the City was subject to New Mexico’s constitutional and statutory prior-appropriation system.

## Legal Principles

- New Mexico applies a single substantive doctrine of prior appropriation to both surface water and groundwater; administrative procedures may differ, but the substantive right obtained is the same.
- The State Engineer may administer connected surface and underground waters together when evidence shows pumping from a basin will reduce the base flow of a surface stream.
- Under the permitting statutes, the State Engineer may deny an application, or approve it with conditions, when necessary to prevent impairment of existing water rights, including senior surface-water rights affected by connected groundwater pumping.
- Where pumping has both return flow and depletion effects, the Engineer may focus on the net depletive impact and require an offset (such as retirement of surface-water rights) to avoid injury to senior users.
- A municipality has no automatic exemption from the appropriation and impairment regime based on an asserted pueblo status, particularly where the claim is not proved in the administrative proceedings.

## Conclusion

City of Albuquerque v. Reynolds holds that New Mexico treats surface and groundwater under the same substantive prior-appropriation rules and that the State Engineer may consider their physical connection to protect senior rights; because the Rio Grande was fully appropriated and the proposed pumping would cause net depletion, the Engineer could deny the permits when Albuquerque refused an offset condition, and the City’s asserted pueblo right did not require a different result.


City of Albuquerque v. Reynolds, 71 N.M. 428, 379 P.2d 73 (1962)